The French government announced plans to convert state-owned power firms EDF and GDF into separate limited companies that operate in geographically distinct markets. BBC News reported that France's CFT union responded by organizing a mass strike, which triggered power outages in some Paris suburbs. Union workers are concerned that privatizing power utilities would lead to large-scale job losses and power outages similar to those experienced in parts of the eastern coast of the United States and parts of Italy in 2003. Suppose that prior to privatization, the price per kilowatt hour of electricity was €0.1 and that the inverse demand for electricity in each of these two regions of France is estimated as P=1.26 - 0.001Q (in euros). Furthermore, to supply electricity to its particular region of France, it costs each firm qQ) = 100 + 0.1Q (in euros). Once privatized, each firm will have incentive to maximize profits. Determine the number of kilowatt hours of electricity each firm will produce and supply to the market, and the per-kilowatt hour price. Instructions: Enter your response rounded to one decimal place. Quantity of kilowatt hours supplied: 580 Instructions: Enter your response rounded to two decimal places. Per-kilowatt hour price: € 0.68 Compute the price elasticity of demand at the profit maximizing price-quantity combination. Instructions: Enter your response rounded to two decimal places. If you are entering a negative number, use a negative (-) sign. -0.59
The French government announced plans to convert state-owned power firms EDF and GDF into separate limited companies that operate in geographically distinct markets. BBC News reported that France's CFT union responded by organizing a mass strike, which triggered power outages in some Paris suburbs. Union workers are concerned that privatizing power utilities would lead to large-scale job losses and power outages similar to those experienced in parts of the eastern coast of the United States and parts of Italy in 2003. Suppose that prior to privatization, the price per kilowatt hour of electricity was €0.1 and that the inverse demand for electricity in each of these two regions of France is estimated as P=1.26 - 0.001Q (in euros). Furthermore, to supply electricity to its particular region of France, it costs each firm qQ) = 100 + 0.1Q (in euros). Once privatized, each firm will have incentive to maximize profits. Determine the number of kilowatt hours of electricity each firm will produce and supply to the market, and the per-kilowatt hour price. Instructions: Enter your response rounded to one decimal place. Quantity of kilowatt hours supplied: 580 Instructions: Enter your response rounded to two decimal places. Per-kilowatt hour price: € 0.68 Compute the price elasticity of demand at the profit maximizing price-quantity combination. Instructions: Enter your response rounded to two decimal places. If you are entering a negative number, use a negative (-) sign. -0.59
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter1: Introduction And Goals Of The Firm
Section: Chapter Questions
Problem 7E
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re-check all values please
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